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The small UK company that is challenging Google over its email service said it is suspending one of its businesses until the dispute is settled.

Independent International Investment Research (IIIR), an Aim-listed financial research and services company, announced on Thursday it would temporarily close Pronet FX, its research service which includes a feature called G-Mail, to new and existing customers.

The dispute centres on Google’s free web-based email service.

IIIR last month filed an opposition to Google’s application for a community trade mark for Gmail. However, on Thursday IIIR said it had determined that in the short term, “the distraction created by Google’s stance on the issue, and the regrettable diversion of resources that this has created, now means that it is better to withdraw its current foreign exchange G-Mail service in Europe and the United States” until the matter was resolved.

Shane Smith, IIIR chief executive, said the move would involve a number of redundancies but would not specify how many of the company’s workforce of 40 would be affected. He said growth in other parts of IIIR’s business, mainly equity research, meant the company would still meet its revenue and earnings targets.

“This is effectively a tactical withdrawal for us, a temporary pullback while we focus our resources on resolving the branding and marketing issues that revolve around the dispute on the ownership of the trademark,” Mr Smith said.

“Once that’s resolved we will come back into the business aggressively and will executive on the plans that we’ve got.”

IIIR in 2004 approached Google after the Californian internet company launched its email service, Gmail, arguing that Google’s service would confuse customer’s of IIIR’s Pronet suite of products, which has a service called G-Mail that allows its clients to forward on research to their own customers.

Google rejects the claims but in October said it would call its email Googlemail in the UK, to avoid confusion for its users. Google could not immediately be contacted for comment on Thursday.

IIIR in September said three parties – two hedge funds and a legal firm – had expressed interest in funding legal action against Google. Mr Smith said on Thursday talks were still under way with two of those parties.

IIIR has a market capitalisation of about £3m ($5.27m), while Google is worth well over $100bn.

IIIR’s shares were down more than 4 per cent to 11¼p in mid-morning trade.